Suppose That an Industry Consists of Two Firms Producing an Identical

Multiple Choice

Suppose that an industry consists of two firms producing an identical product. The market demand for the combined output of both firms is (Q_A + Q_B) = 50 !P. The total cost function of each firm is TC_i = 1 + 10Q_i, where i = A,B. Firm A's best-response function is:

A) Q_A = 50 !Q_B.
B) Q_B = 50 !Q_A.
C) Q_A = 20 !0.5Q_B.
D) Q_B = 20 !0.5Q_A.
E) None of the above."